Facebook CEO Laments the State of Gaming

Mark Zuckerberg says gaming on Facebook "isn't doing as well as I'd like."

Odds are that when you think about games on Facebook, your mind immediately goes to stuff like FarmVille, CityVille and other such mindless "cow-clickers" whose first-and-foremost priorities are to monetize the whales. There are actually Facebook games that don't suck, believe it or not, but it's not an unfair assumption to make given the way the popularity of those games was so enthusiastically trumpeted not all that terribly long ago. But things haven't been going all that smoothly as of late, and even the big dog at Facebook has admitted that Facebook gaming hasn't unfolded quite as he'd hoped.

"Overall, gaming on Facebook isn't doing as well as I'd like," Zuckerberg said during today's third-quarter earnings call. Facebook posted a net loss for the quarter but his comment may have had more to do with yesterday's ugliness at the once-mighty Zynga, which has seen a precipitous decline in its share value in the face of ongoing quarterly losses and yesterday implemented major layoffs across its Austin and Boston studios. Zynga is, or at least was, the engine that drove gaming on Facebook, but Zuckerberg emphasized that while it may be in decline, things are actually looking up elsewhere.

"The reality is that there are actually two different stories playing out here. On the one hand our payments revenue from Zynga decreased by 20 percent this quarter compared to last year. But the interesting thing is that the rest of the games ecosystem has actually been growing," he said. "Our monthly payments revenue from the rest of the ecosystem increased 40 percent over the past year since payments has been adopted. This evolution is pretty encouraging,"

Encouraging, perhaps, but Zynga is such a major component of gaming on Facebook that any decline will require serious growth elsewhere to offset. Facebook revenues were up 32 percent for the quarter to $1.26 billion but it still suffered a quarterly net loss of $56 million, compared to $227 in net income over the same quarter in the previous year.